Heathrow forecasts recovery as passenger levels hit 50-year low

It may have been the most peaceful time in 50 years for millions living under the Heathrow flight path — but not for much longer.

It may have been the most peaceful time in 50 years for millions living under the Heathrow flight path — but not for much longer.

Britain’s premier airport said that the 19.4 million passengers that went through its terminals and shopping malls last year was the lowest number since 1972. That was the year of the Staines air disaster, the UK’s worst, which killed 118 people, and also when preparations began for the merger of British European and BOAC to form British Airways, the airline that remains Heathrow’s biggest tenant.

While this year has started poorly for Heathrow — it is running 23 per cent behind initial projections — it believes that trade will pick up strongly in the summer. It is sticking to its current forecast of 45.5 million passengers for the year, still significantly down on the airport’s 80 million capacity.

Heathrow, privatised as part of the British Airports Authority in 1987 but now owned by a coterie of foreign investors and governments, reported on Wednesday that it lost £1.8 billion on top of the £2 billion losses in 2020, the first year of the Covid-19 virus, which grounded airline fleets around the world and subsequently tied up the industry in travel restrictions.

While restrictions are being relaxed in the UK, that is not the whole story, Heathrow said.

“Removing testing restrictions in the UK has boosted outbound tourism demand,” it said. “But inbound tourism and business travel are suppressed due to testing in other countries — 63 per cent of our markets retain some form of travel restriction or testing requirements and government responses to Omicron show how uncertain broader travel demand remains.

“We don’t expect travel to return to pre-pandemic levels until all restrictions have been removed, passengers can travel with no checks and are confident they will not be reimposed.”

In the opening weeks of the year, Heathrow was operating at just less than half pre-pandemic levels. Passenger numbers to European Union countries and the US are still down by about 60 per cent while those to and from Asia Pacific are nearly 75 per cent off.

Those going through Heathrow terminals spent less in the shopping malls but more in the cafés and bars and on parking their cars.

In a year in which Heathrow’s depressed revenues rose slightly to £1.2 billion, retail income fell 20 per cent to £111 million. Catering income, however, rose 10 per cent to £21 million while parking fee revenues were up 17 per cent at £47 million. Income from the airport’s own Heathrow Express, the high-fare rail link from central London, was flat at £26 million.

Heathrow is in a long-running row with both its regulator and its customers over how much it can charge in take off and landing fees as the industry recovers from its two-year recession.

The Civil Aviation Authority has made an interim ruling that Heathrow can raise its flight charges, which are passed on in passenger fares, by a little more than half over the next five years.

Heathrow says that is not nearly enough for the investment it needs to avoid a return to what it called “Heathrow hassle”, the words used by its passengers for the congested and poorly operated terminals of the past.

The airlines say the level of increase in charges is an outrage. Willie Walsh, head of the airline lobby group IATA accused Heathrow of “disgusting gouging” of its customers.

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